Financial researchers agree that allocating money to employer stock in a 401(k) plan is a poor strategy, yet many employees do so. Not only does this investment strategy bear unrewarded idiosyncratic risk, but it also correlates employees' retirement portfolios with their human capital. I find evidence that this selection is influenced by the investment preferences of peers, which includes both management at the firm and employees at other firms headquartered in the same city. Specifically, the percentage allocated to company stock by employees in the 401(k) plan is positively related to both the net open-market purchases of company stock by management and the average allocation to company stock in 401(k) plans by employees at other firms headquartered in the same city. Surprisingly, the allocation to company stock in 401(k) plans increases with investment in employee stock ownership plans (ESOPs), which are a dominant substitute since they often offer stock at a discount. To identify the cause of this relationship between employees and management, I provide additional support for the peer effects hypothesis through interaction tests. The relationship between employees and management is influenced by distance between peers and trust within the firm - two factors that alter group cohesion and, in turn, the effect of peer influence. These results are robust to size of the firm and also exist for the subsample of firms that have only made matching contributions in cash. Consistent with our understanding of the inertia that exists in employee investment decisions, employee allocations to company stock are influenced for many years by management's initial investment choices made near the time of going public. Lastly, alternative methodologies, including propensity score matched samples and panel regressions, yield the same conclusions.

Thesis (Ph. D.)--University of Notre Dame, 2003. / Thesis directed by Teresa Ghilarducci for the Department of Economics. "June 2003." Includes bibliographical references (leaves 134-139).

Thesis advisor: Jonathan Reuter / This dissertation is comprised of three essays that focus on the role of overseeing entities in retirement plans. In the first essay, I study the role of trustee and non-trustee service providers as well as the composition of a firm's board of directors in overseeing 401(k) plans. I ask whether differences in the number and type of these 401(k) plan overseeing entities can explain differences in 401(k) plan performance and structural characteristics. Using a proprietary dataset of 401(k) plans, I find that having more trustee and non-trustee service providers results in better menu performance. However, these findings are not robust when benchmark adjusting performance. Second, I find that having more non-trustee service providers leads to less menu diversification and higher fund level expenses, but lower total plan expense. Last, having more trustee service providers and a greater percentage of insiders on a firm's board of directors results in a more generous company match. My results suggest that 401(k) plans are significantly impacted by oversight decisions, and that improving oversight quality may be a more effective way to mitigate 401(k) plan losses than focusing on increasing financial literacy of plan participants. In the second essay, I examine the nature of compensation for 401(k) plan consultants and ask whether variations in the form of compensation explain variations in 401(k) plan costs and menu performance. Using a proprietary dataset of 401(k) plans, I find that 401(k) plans which hire a consultant experience lower fund level fees and higher after-fee returns if the consultant does not participate in revenue sharing arrangements. In exchange for their services to improve plans, consultants without revenue sharing arrangements charge higher fees to offset their revenue losses from not having opaque arrangements. This results in higher administrative expenses for plans. The net effect is a 9.6 basis point annual gain for the average plan participant or a 24.7 basis point annual gain for a plan participant invested in the default menu choice, assuming that employees pay the higher administrative expense. My findings are robust to a narrower definition of a consultant, additional controls for investment expertise, retirement expertise and bargaining power, falsification tests, and propensity score matching. Overall, my findings suggest that 401(k) plan menu design may be improved through the use of a consultant if the consultant does not suffer from conflicts of interest. In the third essay, I empirically test whether governance mitigates underfunding in US public pension plans. Traditional governance proxies in public sector defined benefit plans focus on plan board of directors. However, plan responsibilities extend beyond the board and are addressed by state or plan policies and by other entities involved in pension oversight. Using unique governance survey data for US public pension plans, I measure governance in an agency theory framework and in a theoretical best practices framework. In the first framework, governance proxies include state and plan policies while in the second, governance proxies include the distribution of oversight responsibilities. I find that the most important governance policies are those that encourage sponsor commitment to paying required annual contributions. I also find that theoretical best practices do not mitigate plan underfunding. / Thesis (PhD) — Boston College, 2016. / Submitted to: Boston College. Carroll School of Management. / Discipline: Finance.

Over the past three decades, employer-sponsored 401(k) plans have grown in popularity as they have proved to be a valuable benefit employers can provide to employees and tax-deductible expense that employers can easily account for on their books. However, a major concern around these plans is that they have come to take the place of traditional pension plans offered by employers, forcing employees to assume full responsibility for their retirement savings. This paper evaluates the overall effectiveness of 401(k)s at the top 50 companies in the Fortune 100, examining participation rates, account balances, and employer contributions. It concludes that employees that have 401(k)s at these 50 companies fare much better than the average American with regard to retirement savings. Nonetheless, the substitution of traditional pensions with 401(k) plans by companies in the United States is problematic. Employees, which previously could rely on a company pension in retirement, are unintentionally delaying retirement due to a lack of savings. Furthermore, a growing number of workers without retirement savings will certainly put a strain on Social Security funds in the coming decades.

The nature of employee retirement plans has changed dramatically over the past fifteen years as employers have been replacing traditional defined benefit retirement plans with defined contribution plans like the 401(k) plan. This dissertation is focused on the impact that 401(k) plan have on household asset accumulation. The first essay looks at how much asset accumulation can be attributed to 401(k) plans as opposed to other factors such as demographics and saver type characteristics. Overall, the conclusions are consistent with recent research that says these plans induce a reshuffling of assets rather than being funded through a reduction in consumption. Controlling for cohort effects reduces the amount of wealth attributable to 401(k) eligibility to a negligible (and statistically insignificant) amount. The second essay considers the impact that borrowing against the assets in 401(k) plan might have on household asset accumulation. Most personal finance advice warns against borrowing against a retirement plan because of the potential negative impact on retirement wealth. This is especially true for borrowers who are also undisciplined savers and do not or cannot maintain their retirement plan contributions during loan period or who separate from their employers before the loan is repaid. For good savers a retirement plan loan only has a modest impact on retirement wealth. Only modest make-up contributions would need to be made to mitigate the impact of a retirement plan loan. It seems that many borrowers may be using retirement loans because they are in financial difficulty. It also appears that borrowers are trying to maintain their retirement savings, but their asset accumulation within broader measures of wealth is below that of households that do not have outstanding 401(k) loans.

Thesis (Ph. D.)--University of California, San Diego, 2004. / Vita. Includes bibliographical references.

Thesis advisor: Alicia Munnell / Thesis advisor: Tony Webb / Risk level of investments helps to determine investment return in the long run. Consequently, it is important to understand how investors determine their acceptable level of risk. Previous studies have suggested that women have a lower risk tolerance in investing than men. This is troubling because it means that women are likely to make lower returns on investments than men. This difference in acceptable risk could lead to income inequality between men and women during retirement as people rely on wealth generated from investments made during their lifetime to live during this stage of life. This study seeks to explain what motivates women to choose their acceptable level of investment risk by expanding on the models of previous studies, which are believed to be overly simplistic in their treatment of gender. / Thesis (BA) — Boston College, 2008. / Submitted to: Boston College. College of Arts and Sciences. / Discipline: Economics. / Discipline: College Honors Program.

Target-Date Funds (TDFs) facilitate retirement planning by varying asset allocation over time with the goal of reducing portfolio risk. We explore potential agency problems in TDFs by examining their return performance and flow-performance relation. We find that TDFs under-perform balanced funds (BFs) which are also approved as a default option along with TDFs in 401(k) plans with automatic enrollment. We show that the under-performance is driven by TDFs that have a fund-of-fund structure and constituent funds with high expense ratios or poor performance within the fund family. Additionally, we discover an absence of flow-performance relation in TDFs while BFs exhibit the convex flow-performance relation shown for mutual funds. Our evidence suggests the presence of agency problems in TDFs arising from investor inertia, weak incentives for fund managers to outperform peers, and opportunities for fund families to gain private benefits.

本論文寫作的同時，正值台灣針對勞工退休金制度，進行改革之際。作者認為，改革重點除了建立完全累積且具可攜性的退休金計劃之外，更可以參考強調市場競爭的美國與香港企業退休金市場的經驗，大幅度開放民營機構參與勞退新制的業務。如此，將可透過市場的競爭力量，提升服務品質與退休資產的報酬率，以真正造福廣大勞工的退休生活。 本研究首先探討美國401(k)計劃、香港強積金制度、台灣的勞工退休金制度與金融產業的分工狀況；其次針對勞工退休金制度、401(k)計劃、強積金制度的運作流程及經營模式進行剖析；之後就十四家美國401(k)計劃與五家香港強積金制度的參與機構，進行個案分析；最後則提出勞退新制經營模式的相關命題，並得到以下的結論：(1)、台灣人口老化及企業退休金的民營化的趨勢，象徵退休市場將大幅發展及退休資產迅速的累積。(2)、金融保險機構的規模愈大時，參與勞退新制的動機與需求愈強，且愈傾向提供收支、保管、運用的完整服務。(3)、就勞退個人帳戶制而言，廣大的勞工與企業客戶基礎為參與收支保管業務的主要考量，而累積龐大的退休資產則為參與基金運用業務的主要考量。(4)、外商參與機構的競爭優勢為國外經驗，本土機構的優勢則為客戶與通路的基礎。(5)、具國外經驗的外資機構與其通路客戶基礎的本地機構，共採「策略聯盟完整服務」的經營模式，將取得明顯的競爭優勢。(6)、個人帳戶制參與機構的產業別、業務範圍、及目標市場會影響經營模式的選擇。(7)、銀行業與保險業將傾向採取 「垂直整合完整服務」或「策略聯盟完整服務」的經營模式；資產管理業將以「資產管理單項服務」的經營模式為主。(8)、業務範圍愈完整者，愈傾向「垂直整合完整服務」的經營模式；具金融控股公司架構的金融保險集團，將成為勞退市場最具市場競爭力的參與機構。(9)、兼具批發與零售業務的基礎，為行銷業務與建立客戶長期關係的關鍵因素。(10)、現行的勞退附加年金制，並不具商業價值且隱含經營風險，預計勞退附加年金制將朝向公辦民營，或完全由公營機構承辦的方向發展。(11)、其他年金制下的人數限制為影響其經營價值的關鍵因素。 (12)、其他年金制下的確超給付計劃基於利率與其他的經營風險，其經營價值低於確定提撥計劃，保險業可視其他年金制下的確定提撥計劃為其人數限制的個人帳戶制，因此保險業應以爭取降低或取消人數限制為參與勞退新制為主要目標。 此外，本文也針對台灣勞工退休金制度以及有意於參與經營的金融保險機構，提出勞退制度內容、機構經營模式、進入市場策略、及營運策略等相關的建議。 關鍵字：勞工退休金制度、401(k)計劃、金融保險機構、經營模式

Due to the combined impact of global population aging, increased life expectancy, fertility decline, and changing family structures, a growing segment of the population facing retirement is in danger of poverty and economic insecurity. As a result of their advanced age many elderly have lost their ability to earn an income, causing some to be penniless the rest of their lives. Therefore, the purpose of a government or a private run pension system is to provide a mechanism using financial tools to protect the entire structure for old age economic security. This paper not only introduces the philosophy and basic concept of a general pension system, but also examines a United States model, providing a closer look at a major developed industrial country’s national social security program, and corporate pension system. It also describes the experience of reforms on the development process of the United States retirement pension system. This paper studies the various corporate pension schemes in the United States and their possible application as models to countries such as Taiwan. In focusing on the United States corporate pension system in private sector, legal and economic issues are scrutinized. Theories which related to the pension system are first analyzed; then the definitions of the various retirement plans are given. The history of private pension schemes of the United States is told, starting with the American Express, then crude railroad retirement plans to the post-war demand to current United States retirement plans. Analysis of the changes in private sector's pension plan participation for defined benefits and defined contribution plans are examined in light of the impact these changes have made upon retirement income resources. Focus on the IBM Corporation is made as an example of a private sector business in the United States, and this study tracks the evolution of the company’s pension schemes from defined benefit pension plans to the newer hybrid cash balance pension plans and the now-popular defined contribution 401(k) pension plans. Findings show that the United States corporate pension system is not feasible as a model at this time because of its many deficiencies in its laws and regulations, and also because of the currently shaky global economy. Suggestions and possible remedies are given on how to strengthen the corporate retirement pension system in United States.